It’s only been about three months since home-sales marketplace Opendoor has been open for business, but it is already making its market on residential real estate in Phoenix, Ariz. As it looks to expand into two new cities, the company has raised $20 million in additional funding led by GGV Capital.
Opendoor was founded by Khosla Ventures VC and former Square COO Keith Rabois and Movity founder Eric Wu to change the way real estate is bought and sold. For homeowners looking to move out of their homes, Opendoor offers a simplicity and speed of sale that is more or less unprecedented in the residential real estate market today.
By applying a certain amount of data analytics, Opendoor can very accurately determine the fair value of a home and quickly make an offer on it. That reduces the amount of time its takes to close a deal, while reducing the uncertainty associated with selling a house on the open market.
The average property sits on the market for more than three months (103 days!) waiting to be bought, and a number of home sales either fall through or get pulled from the market due to lukewarm interest. That’s not an issue with Opendoor, which can make an offer and purchase a home within three days of the seller entering information into its system.
Once that deal is completed, Opendoor handles all the traditional paperwork, inspections, and repairs necessary to make a home ready to be purchased. It goes through the process of getting a home sale-ready, lists it on various real estate sites, and deals with the time it takes to sell the property.
In its launch market of Phoenix, where Opendoor has been operating since December, the company is purchasing about one home each day, according to Wu. But it’s looking to expand quickly into two more markets — Portland, Ore. and Dallas, Texas.
To do so, it’s raised $20 million in a new round of funding led by GGV Capital, along with Khosla Ventures, the Mack Family, Thrive Capital, Caffeinated Capital, Sherpa Ventures, Haystack Fund, and Instagram’s Kevin Systrom. That financing follows a star-studded Series A round, which included too many big investors to name them all again here. GGV Capital managing partner Glenn Solomon, who has led investments in Pandora, Successfactors, Nimble Storage, Zendesk, Domo, and Square for GGV, will be joining Opendoor’s board of directors.
For Solomon, the investment was all about backing a “great team” that is tapping into a huge market opportunity. After all, he said, about 5 million homes change hands in the U.S. each year — but it’s not a great experience for anyone involved today.
“Anyone who sells a home knows that it’s a process that’s fraught with risk and there’s a high rate of homes that don’t even sell,” Solomon told me by phone.
But making things easier for sellers is just one part of the problem. While Opendoor is focused primarily on them currently, it seems clear that the company will eventually look more like a true marketplace, where buyers can also make purchases directly from it.
In the same way it’s built tools to provide more price transparency to sellers, Opendoor could make the buying process a lot more efficient. Doing so could save all sides a lot of time, and most importantly, save them money.
Of course, it will take them some time to get there. In the meantime, the company has a business that appears to be working, and plenty of money in the bank. There are worse situations to be in.